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March 21, 2019

This woman's $101K 'surprise' medical bill inspired a groundbreaking law. (But she still had to pay up.)

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    When professional pianist Claudia Knafo had to undergo spinal surgery in 2012, she carefully considered which surgeons would be in-network to perform the procedure. Eventually, Knafo found one surgeon online whose website suggested he was in network for her insurance and, just to confirm, she called the doctor's office. At a preliminary appointment, office staff photocopied Knafo's health insurance cards.

    'Surprise' medical bills, explained in 5 charts

    The spinal surgery was successful, but weeks later Knafo received bad news: The surgeon's website was incorrect and he didn't have a contract with her health insurance plan after all. The procedure was going to cost $101,000.

    Knafo's health plan agreed to cover $66,000, but that left her on the hook for the $35,000 balance.

    Weeks later, Knafo received more bad news from her health plan. The insurer said they'd overpaid her doctor by mistake and asked Knafo to get the $66,000 back from the surgeon—who did not want to return the money. "It felt like I was in the middle of a nuclear attack," Knafo said. "I had the insurance coming after me for $66,000 and the doctor coming after me for $35,000. I was stuck in every hole in the system."

    Frustrated by her situation and the system, Knafo traveled to the state capital to share her story with lawmakers and encourage them to pass legislation to protect patients from ending up in a similar predicament. Her efforts proved successful. In 2015, New York passed a groundbreaking law, one of the strongest in the country, aimed at preventing surprise medical bills.

    New York’s Major League approach to surprise billing

    The 2015 law drew inspiration from an "unlikely" source, Kliff writes: Lawmakers applied the arbitration process that Major League Baseball uses to settle salary disputes between new players and their teams to settle billing disputes between insurers and physicians.

    Under the legislation, instead of charging patients for the remaining balance after insurance, as Knafo's surgeon did, a doctor who feels that they are undercompensated by a health plan can request an arbitration process through the state. The insurer and the doctor each name an appropriate cost for the procedure, and the arbiter makes the final, binding decision based on which number is most reasonable. "[W]hoever is closer to reality wins," Jeffrey Gold, a SVP with the New York Hospital Association who helped develop the law, said. "I felt that … would very quickly set a market rate for what was an acceptable behavior."

    Since the law passed in 2015, the number of out-of-network bills in the state has decreased by almost 34% and in-network ED physicians' prices have declined by 9%, according to a working paper from three Yale University researchers.

    It's also relived pressure on patients, Kliff reports. "One thing that is pretty clear is that [the law] is keeping patients out of the middle of these billing disputes, and that was a key goal," Benjamin Chartock, a researcher at the University of Pennsylvania who's currently studying the approach, said.

    But years after the law's passing, patients like Knafo are still underwater

    While the New York arbitration law has settled almost 2,000 billing disputes since its implementation, it still doesn't protect all patients from all types of surprise bills, Kliff reports.

    The law, which could be used as a model for national policy (that may have even gain bipartisan support in Congress), is specifically designed to protect patients who "can't reasonably be expected to make informed choices about their doctors," such as patients who receive care from an out-of-network physician at an in-network ED, Kliff writes. As a result, the law does not protect patients like Knafo who plan their appointments in advance and chose the doctors, Kliff writes.

    Therefore, Kliff writes, even if Congress were to pass national legislation similar to New York's, it wouldn't address the root of the problem: The high—and rising—cost of health care in the United States.

    Kliff notes that other countries have successfully created price regulation systems, but to date, U.S. policymakers have not been willing to overhaul the country's existing health care system.

    As for Knafo, she's currently preparing to undergo a second spine surgery. She told Kliff that she would take the same steps she did last time to ensure that her doctor is in network, but she's still worried about facing another surprise bill.

    "I'm trying to get something in writing. And I'll be checking that against my plan to make sure there are no loopholes. After having an experience like I did, how can you do something else?" she said (Kliff, Vox, 3/18; Gooch, Becker’s Hospital Review, 3/19).

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